New Jersey state law offers more protection from creditors than federal wage garnishment rules. In most New Jersey cases, creditors that have a judgement can only take 10 or 25 percent of your earnings, but may be able to take more depending on the circumstances.
What is Wage Garnishment?
Wage garnishment is an order from the court that allows a creditor to garnish (take) a specified percentage of your income to repay a debt. It means that your employer is required to withhold a portion of your paycheck and send it directly to the creditor.
There are different garnishment rules that apply depending on the debt you owe, but there is always a limit to how much a creditor can garnish.
When Can a Creditor Garnish Wages?
Most creditors are not legally able to garnish your wages until they have a court order to do so. In order to get this judgement, a creditor will have to sue you for unpaid debts, such as a credit card bill or medical expenses. There are a few types of debts that do not require creditors to get a court order before garnishing wages. They are as follows:
- Defaulted student loans
- Child support
- Income taxes
Wage Garnishment Limitations
In order to ensure that you have enough for required expenses like rent and food, courts will not let creditors garnish too much from your checks. The limit is different depending on the type of debt. Federal law restricts creditors from garnishing more than 25 percent of your disposable income or less than 30 times the current minimum wage, whichever is less.
However, as mentioned before, New Jersey has imposed stricter rules regarding garnishment. In New Jersey, a creditor may only take 10 percent if your total income is not more than 250 percent above the federal poverty level, and 25 percent if your income is more than 250 percent above.
Special limitations have been placed on certain debts in New Jersey. They are as follows:
- Child Support – Those responsible for collecting unpaid child support could potentially take as much as 60 percent of your paycheck, depending on the situation.
- Income Taxes – The federal government does not need a court order to garnish your wages. Also, they place their own limits on how much they can garnish. How much they end up taking will depend on your deduction rate and how much you owe.
- Student Loans – Creditors acting on behalf of the U.S. Dept. of Education may take up to 15 percent of your disposable income to repay defaulted student loans.
Talk to a bankruptcy attorney about how filing bankruptcy could be the best solution to wage garnishment problems.